Advances in Environmental Biology

Advances in Environmental Biology, 8(21) October 2014, Pages: 14-23
AENSI Journals
Advances in Environmental Biology
ISSN-1995-0756
EISSN-1998-1066
Journal home page: http://www.aensiweb.com/AEB/
The Impact of Implementing Accounting Standards 30 and 31 on the Financial
Performance of the Firms Listed on the Tehran Stock Exchange
1Abolfazl
Moghimi, 2Ashraf Sadat Taran, 3Ali Fazel Yazdi, 4Shahin Dehghan Harati
1
Faculty Member of Payam Noor University Taft, Iran
Master of accounting from Allameh Tabatabayi University
3
Young Researchers and Elite Club, Yazd Branch, Islamic Azad University, Yazd, Iran
4
Department of Accounting, Yazd Branch, Islamic Azad University, Yazd, Iran
2
ARTICLE INFO
Article history:
Received 4 September 2014
Received in revised form 24 November
2014
Accepted 8 December 2014
Available online 16 December 2014
Keywords:
Iran Accounting Standards
Financial Performance
Return on Assets
Return on Equity
ABSTRACT
One of the fundamental requirements for assuring the investors and creditors to take
constructive actions is providing information which is known to be useful in making
financial and economic decisions. There should be some mechanisms for assuring the
investors and other users about the quality of the financial information in order to
improve the efficiency of the capital market and allocate the funds optimally. However,
the significant information for the investors and other users should be sufficiently
disclosed to be useful in their decision making. The financial statements are the most
important source of investors for receiving information. The financial statements are
prepared and published based on accounting standards and that is the reason for the
significance of the precise preparation of these standards. This study seeks to find
whether the implementation of accounting standards 30 and 31 has affected the
financial performance. To measure the financial performance, some financial ratios
such as return on assets (ROA), retrun on equity (ROE), price to earnings ratio (P/E
ratio) and earning per share (EPS) are used. Using a sample composed of 122 listed
firms on the Tehran Stock Exchange and the data of a six-year period (2006 ro 2011),
the research hypotheses are examined. The findings reveal that implementing the
standards 30 and 31 has significantly affected P/E, ROA and EPS; however, no
significant impact is found for ROE.
© 2014 AENSI Publisher All rights reserved.
To Cite This Article: Abolfazl Moghimi, Ashraf Sadat Taran, Ali Fazel Yazdi, Shahin Dehghan Harati, The Impact of Implementing
Accounting Standards 30 and 31 on the Financial Performance of the Firms Listed on the Tehran Stock Exchange. Adv. Environ. Biol.,
8(21), 14-23, 2014
INTRODUCTION
In the competitive world, the successful countries are the ones which have available financial resources in
order to invest their funds and allocate their sources in a way they could achieve the maximum return. Based on
the limitation of the financial resources, a correct decision must be made for the investment of the funds.
Accounting holds the responsibility of neutral informing on the information society and plays a significant role
in enhancing the information quality. To achieve the accounting objectives, some standards are set and the
accountants and other providers of the accounting reports and information are required to follow them. As a
result, the accounting standards are established in a way they could enhance the information quality and make
the users informed [26]. The national economy needs some regulations by which it could make the business
environment transparent and attractive and regulate the economic relationships to protect the rights of the
participants. The Stock Exchange regulations are the most important ones among the accounting standards.
Financial instruments, financial market and financial institutions are the three main bases of the financial regime
which are responsible of transferring surplus funds in the society to those fields with the lack of financial
resources. The correct establishment of these fundamentals in the society will cause the economic prosperity. To
achieve the macroeconomic objectives, the financial system should move towards an advanced financial system
in which the standards of accounting and reporting are followed along with the requirements of the capital
market. As a result, it is very necessary to follow these rules and regulations to increase the level of investments
and production [33]. The establishment of accounting standards has various consequences for many individuals.
The standard setters try to enhance the reporting quality by establishing suitable standards which are used in
Corresponding Author: Ali Fazel Yazdi, Young Researchers and Elite Club, Yazd Branch, Islamic Azad University, Yazd,
Iran. Safaieeh, Shoahadegomnam Road, Zip code: 89195/155, Yazd, Iran,
Tel: (98)351-8211391 Fax: (98)351-8214810 E-mail: [email protected]
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Ali Fazel Yazdi et al,2014
Advances in Environmental Biology, 8(21) October 2014, Pages: 14-23
their evaluations for the future standards. Furthermore, the investors benefit from the better recognition of the
general validation of the accounting standards. The accounting standard 30 describes some regulations and
provides EPS to improve the comparability of the performance of different business units in a reporting period
and also improve the comparability of the performance of one specific business unit in different reporting
periods. Consequently, the present study seeks to find whether the implementation of the accounting standards
30 and 31change the financial performance of the firms. Because of using financial ratios in the study, the
impact of implementing standards on the financial performance through the changes in some key ratios has been
evaluated in this study.
Theoretical Bases and Research Background:
Considering the theoretical bases and previous backgrounds, the weakness and strong points are discovered.
As a result, the researcher might select the appropriate research plan and control or remove the observable
deficiencies of the prior methodologies [27]. Because of the significance of the literature review and previous
studies, the next section reviews the prior literature and research history.
2.1. Introduction to Iran Accounting standards 30 and 31:
Earning per share serves as a commonly used phrase in the financial market. Comparing this indicator based
on changes in the capital has provided difficulties in the stock exchanges which are aimed to be resolved through
establishing accounting standard 30. This standard seeks to establish some regulations for the determination and
provision of EPS in order to improve the comparability of the performance of different business units in one
reporting period and also improve the comparability of the performance of one business unit in different reporting
periods. Various accounting trends for determining EPS caused limitations in information about EPS; however,
the consistency in determining the denominator of EPS calculation formula enhances the financial reporting
quality. As a result, the main emphasize is on the denominator of the EPS formula. The application range of
standard 30 is so extensive that it should be employed by the business units which have publicly traded their
common stocks or are going to publicly trade their stocks. The business units which represent the consolidated
and separate financial statements together should consider the disclosure requirements of this standard only based
on the consolidated information. The information about EPS should be separately disclosed in the context of the
income statement when a company intends to disclose EPS based on separate financial statements. On the other
hand, the other business units must disclose the amount of EPS based on this standard. According to accounting
standard 31, the non-current assets held for sale should be valued at lower of cost or net sales value. Non-current
assets held for sale are those assets with the values restored mainly through sale and not through continued usage
of the assets. The depreciation of these assets stops from when they are classified as held for sale assets. These
assets might be in form of a specific property such as a building or might be in terms of a subsidiary unit. The
accounting standard 31 provides a new definition and representation method of the discontinuing operations and
excludes provisions 18 to 25 of the accounting standard 6. Based on this standard, the income statement is
divided into two sections of continuing and discontinuing operations and the extraordinary items are excluded.
2.2. Theoretical Bases and Concepts of the Financial Performance:
The occurrence of industrial revolution and its continuity in the 19th century, the foundation of great factories
and the implementation of important plans such as railways require a considerable amount of money so that the
needed fund is beyond the financial facilities of one or more investors and even the government. As a result, the
first corporations were formed by using two great achievements of the industrial revolution including organizing
and cooperating. The liability of the owners in this corporation was limited to their invested funds. This new
frame was known as an appropriate solution for supplying the huge amounts of funds and distributing business
risks. After this period, the authority and power of decision making in the corporations were held by those
managers with conflict of interests with the external groups and shareholders. This conflict of interest was
resulted from the segregation of ownership and management. The recognition of the problems associated with the
segregation of ownership and management has been much debated for quite an extensive period. Some measures
have been defined to evaluate the financial performance in order to balance the conflict of interests [19]. The
evaluation of the financial performance has been much considered by shareholders, investors, creditors, banks
and other institutions. By segregating the ownership from management and after the emergence of the agency
theory, the performance evaluation has been introduced as one of the most important subjects in accounting [20].
Accounting is an efficient instrument for providing useful information for the decision making and judgment of
the users of the financial statements. The core of many discussions supporting the existence philosophy of the
accounting knowledge is the emphasis on the judgment and decision making of the users. Based on the theoretical
bases of accounting and financial reporting of Anglo-Saxon countries and Iran, the investors are known as the
main users of the financial statements. The investors seek to find the information by which they could evaluate
the expected risk and return [11]. The present study is mainly concentrated on the evaluation of the financial
performance of the firms. The accounting information system results in the financial reports and the most
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important item of this report is known as the reported earnings. Relying on the accounting earning, the firm’s
performance is evaluated and the predictions are made. The directors also use earnings to plan for future. Based
on the accounting model of financial performance evaluation, the firm’s value is calculated by multiplying two
figures. The first figure is the profit of the company and the second figure is the coefficient of converting profit
into value. As mentioned before, in the accounting models of performance evaluation, the firm’s value is a
function of various measures including ROA, ROE, EPS and P/E [29]. Accounting earnings is the most
traditional measure of performance evaluation which has essential significance for the investors, shareholders,
managers and creditors. Accounting earnings, calculated by accrual basis, is one of the most important measures
of performance evaluation based on Lehn and Makhija [18], Chen and Dodd [6] and Worthington and West [34].
These measures are easily available and they might be easily calculated by a wide range of the users of financial
information. The prior studies have also shown that accounting earnings and its information give useful
information to the users and are very effective in making decisions [3].
In the present study, the financial performance is evaluated by measuring the changes in some of the key
financial ratios. The financial ratios in this study are defined below:

Return on Assets:
Return on assets is an indicator of how profitable a company is relative to its total assets. This ratio indicates
the efficiency level of the management in utilizing the present resources in earning profits.
Return on Assets=
ROA might be also defined in terms of Dupont formula as follows:
×
As shown in the above formula, ROA increases as the gross margin or total assets increase. However, this
ratio depends on the industry type. For example, the retailers have higher potential for increasing the flow rate of
total assets. It must be mentioned that the gross margin of an industry might be very variable because it is a
function of sales, cost control and prices. Consequently, the company which intends to increase the return on
assets might identify the effective factors by using Dupont formula [22].

Return on Equity:
This indicator measures the rate of return on the ownership interest of the common stock owners.
Return on Common Stock Owners=
ROE can be also calculated by using ROA and debt ratio as follows [19]:
Return on common stock owners= ROA ×
Return on common stock owners= ROA ×
-

Price-Earnings Ratio:
Some ratios evaluate the opinion of the shareholders about the company. P/E ratio is one of these measures
calculated by dividing the market value per share by the earnings per share. The higher ratio of P/E is a
satisfactory indicator because it shows that most of the investors predict a good future for the company [25]:
P/E ratio=

Earnings Per Share:
This ratio shows the portion of the company’s profit allocated to each outstanding share of common stock.
When the capital structure is composed of preferred stocks in addition to the common stocks, the profit allocated
to the preferred stocks should be deducted from the net income to determine the amount allocated to the common
stock owners. However, when there are no preferred stocks in the capital structure, EPS is calculated by dividing
net income by the issued stocks. EPS is known as a useful measure in evaluating the operational performance of
the company [15]:
EPS=
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2.3. Research Background:
Nikoumaram and Fathi [23] examined the impact of national standards of Iran’s accounting on the quality of
the financial reporting and earnings persistency. They found that there is no significant difference between the
earnings persistency after and before the implementation of the accounting standards; that is, the accounting
standards have no impact on the earnings persistency. Darabi and Moradlou [9] investigated the relationship
between information transparency and information content of the accounting earnings in the firms listed on the
Tehran Stock Exchange. Their findings revealed that there is no positive relationship between information
transparency and information content of the accounting earnings. Yavari [35] tried to find whether the
establishment and implementation of the accounting standards impact the disclosure level of the financial
information of the firms listed on the Tehran Stock Exchange. He concluded that there is a significant difference
between the disclosure level before and after the adoption and implementation of the accounting standards. It was
also found that the level of the information disclosure in the Tehran listed firms increased by establishing and
implementing accounting standards. Mehrazin et al [21] explored the association between information content of
earnings and transparency level of the financial information in Iran. The results of the hypotheses testing revealed
that in the companies with low transparent information, the earnings have higher information content for the
market. Setayesh and Ebrahimi [28] investigated the effect of corporate governance mechanisms on the
information content of the earnings of the firms listed on the Tehran Stock Exchange. They found a significant
positive relationship between the information content of the earnings and ownership concentration and
institutional ownership.
Chidambaran [7] examined the relationship between corporate governance and financial performance. He
found that the positive changes in the corporate governance elements result in better financial performance.
Kohlbeck and Warfield (2005) examined the impact of principles-based-standards on the accounting quality.
They confirmed the increasing significance of accounting quality from the perspective of analysts and investors.
However, the accounting quality based on accounting characteristics caused lower persistency. Christensen et al
[8] tested the economic consequences of the British companies after the EU decision about mandatory
implementation of international financial reporting standards. They showed that the temporary changes in the
short-term reflections of the market and long-term changes on the cost of capital are related to decision making.
Susana et al (2007) examined the impact of implementing international financial reporting standards on the
financial statements of Spain companies. They concluded that the implementation of the new standards did not
reinforce the existing situations. Barth et al [4] compared the specifications of the accounting figures in 21
countries which used international standards and those countries which relied on the national standards. Their
findings confirmed that the implementation of the international standards causes lower earnings management,
ontime recognition of the losses and enhanced quality of the accounting information. Nobanee and Hajjar [24]
investigated the relationship between working capital management, operating cash flow and firm’s performance
over 1990 to 2004. They found that the managers might have better financial performance by shortening cash
conversion cycle and accounts receivable turnover. Lantto, Anna and Sahlstorm [17] conducted a study about the
impact of implementing international standards on the key financial ratios. The findings of this study revealed
that employing international standards in Finland resulted in higher profitability ratio, lower P/E ratio, lower cash
ratios and higher leverages. Dilitte Institute [10], one of the big audit institutes in the United States, examined the
accounting standards in small corporations. It was found that these companies support their specific accounting
standards.
3. Methodology:
The research methodology depends on the objective and nature of the study. This is an inductive study
because it uses the observations from the sample to develop a model for the population. Furthermore, this is an
analytical study trying to explain the relationship between the variables by using statistical tests. The required
data for the theoretical discussions such as literature review is gathered by library method and the empirical data
is collected by field studies and historical data through databases and annual journals and reports of the Tehran
Stock Exchange. It must be mentioned that the data for testing the hypotheses is exploited from Rahavard-eNovin and Tadbir Pardaz software. The validity of the data is confirmed by random sampling and the formal
reports and information published by Tehran Stock Exchange. The collected data is analyzed by EXCEL and
SPSS. The independent variable of this study is the implementation and non-implementation of standards 30 and
31 and the dependent variable is the financial performance. The research model and the variables and their
calculation methods are described below.
, ROAi,t, ROEi,t, EPSi,t = β1STANDARDt +β2SIZEi,t + β3AGEi,t - LISTi,t + εt
Where in it;
STANDARDt: This variable is equal to one when the standards 30 and 31 are efficient and zero, otherwise.
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: This is an indicator of P/E ratio and is a dependent variable.
EPSi,t: This variable shows the earnings per share and is calculated by dividing total earnings by the number
of the stocks.
ROAi,t: Return on assets for a financial period calculated as follows:
ROAi ,t 
Earningi ,t
Total Assetsi ,t
ROEi,t: Return on the equity for a financial period calculated as follows:
ROEi ,t 
Earningi ,t
Equityi ,t
SIZEi,t : This is an indicator of the firm size and used as a control variable. This variable is calculated by the
logarithm of the total assets.
AGE-LISTi,t: This is a control variable and is an indicator of the level and age of the listed firms.
3.1. Population and Sample:
The population of this study is composed of the whole firms listed on the Tehran Stock Exchange. This
population is selected because of the availability of the financial information about the Tehran listed firms and the
specific homogenous regulations of this exchange. The sample firms are selected among the firms except for the
financial intermediaries and investment companies. The four following criteria are used to select the sample:
1. The sample firms are listed on the Tehran Stock Exchange from the beginning of 2006.
2. The sample firms have not stopped their operations or changed their fiscal period.
3. The ending of the fiscal years of the sample firms is consistent with the calendar year (The other firms are
excluded in order to consider the time the specific standards became effective).
4. The required data of the sample firms should be available.
The sample firms are selected based on filtering technique and 122 companies (732 firm-year observations)
are chosen as the sample.
3.2. Research Hypotheses:
A hypothesis is a knowledge-or-experience based explanation for a problem and is considered as an assumed
relationship between two variables represented as testable statements (Khaki, 2003). The following hypotheses
are developed:
The first hypothesis: The implementation of accounting standards 30 and 31 has significant impact on ROA.
The second hypothesis: The implementation of accounting standards 30 and 31 has significant impact on
ROE.
The third hypothesis: The implementation of accounting standards 30 and 31 has significant impact on P/E
ratio.
The fourth hypothesis: The implementation of accounting standards 30 and 31 has significant impact on EPS.
4. Research Findings:
* Analyzing the first hypothesis:
The first hypothesis examines the impact of implementing accounting standards 30 and 31 on ROA. In terms
of the statistical relationships, this hypothesis is explained as follows:
H 0 : bs  ˆ s
H : b  ˆ
1
s
s
Based on table1, F Limer test is 9.74 and its significance level is 0.000 (p> 0.05); that is, the calculated F
Limer confirms that the null hypothesis should be rejected and the panel data should be used. On the other hand,
the results of Breusch-Pagan test confirm the rejection of the null hypothesis and it indicates the random effects.
Hausman test also confirms the effectiveness of fixed-effect in comparison with random effect. Generally, the
fixed-effect panel data is selected to estimate the intended equation.
Table1: Results of tests used to determine the methods used for the first hypothesis.
Index
Statistics
Sig. level
Test
F Limer
9.74
0.00
Breusch-Pagan
607.34
0.00
Hausman
27.71
0.00
Result
Panel data
Random effects
Fixed-effect
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The panel data approach requires the unequality of the variances. Based on the significant impact of this
issue on the estimation of the standard deviation of the coefficients and the inferential statistics, it is necessary to
examine the unequality of the variance. Table 2 represents the results of testing the unequality of the variances on
the residuals of the used model. Likelihood ratio is employed to test the equality of the variance in panel data. The
value of
 2 shows that the null hypothesis should be rejected.
Table 2: Results of testing the equality of the variances for the first hypothesis.
Index
Statistics
Sig. level
Test
Likelihood ratio
721.99
0.00
Result
Unequality of variance
General least squares (GLS) method is a way of resolving the problem of unequality of the variance. To
estimate the equation, GLS method is used and the results of the model estimation are represented in table3.
Table 3: GLS model for the first hypothesis.
ROAi ,t   0  1STANDARDt   2 SIZEi ,t   3 AGE _ LISTi ,t   t
Sig. level
Statistics z
Std. deviation
Coefficient
0.00
0.00
0.05
0.00
-4.33
8.18
-.2.4
0.29
0.297737
0.1277543
0.0007418
0.0971093
-1.290467
1.045319
-0.0017767
0.0279933
R2
F-statistics :13.14(0.00)
Index
Variable
Standard
SIZE
AGE-LIST
Intercept
:)0.06)
As shown in table3, it is concluded that implementing standards 30 and 31 has significant negative impact on
P/E ratio. The findings of data analysis represent that there is a negative relationship between these two variables
and this coefficient is -1.3; while the significant level of this variable is 0.00 which is significant at the 95 percent
level. In terms of the control variables, both variables of SIZE and AGE-LIST are significant. The findings also
reveal that SIZE has a positive relationship with ROA at the 95% level. It can be then concluded that this variable
is significant. On the other hand, AGE-LIST is significantly associated with ROA. As a result, F statistics show
the general validity of the model. Based on table 3, the calculated F is greater than F in the table (p<0.05); it is
then concluded that this model is significant at the 95 percent level. In other words, this model is valid and the
findings show that R2 of the model is 6% which states that 6 percent of the changes in the dependent variable are
explained by independent and control variables.

Analyzing the second hypothesis:
The second hypothesis examines the impact of accounting standards 30 and 31 on ROE. This hypothesis is
explained as follows:
H 0 : bs  ˆ s
H 1 : bs  ˆ s
Based on table 4, the calculated F is 1.17 and the significance level is 0.123 (p>0.05) and it is concluded that
the calculated F Limer confirms that the null hypothesis should be rejected and the pool data approach is
significant.
Table 4: Results of tests to determine the method used for the second hypothesis.
Index
Statistics
Test
F Limer
1.17
Sig. level
Result
0.123
Pool data
The results of testing the hypothesis by using Stata software is represented in table 5.
Table 5: Results of pool data for testing the second hypothesis.
ROEi ,t   0  1STANDARDt   2 SIZEi ,t  3 AGE _ LISTi ,t   t
Sig. level
T statistics
Std. deviation
Coefficient
0.925
0.00
0.302
0.580
-0.09
4.15
1.03
0.55
4.45819
0.4016331
0.1518568
21.92377
-0.4218573
1.667086
0.1570043
12.12694
F
: 59.11(0.00 ( R
2
:(0.19)
Index
Variable
Standard
SIZE
AGE-LIST
Intercept
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According to table 5, it is found that implementation of standards 30 and 31 has no significant impact on
ROE. In terms of the control variables, only SIZE is found to have a positive relationship with ROE at the 95
percent and it can be argued that this is a significant relationship. As a result, F statistic shows the general validity
of the model. Based on table 3, the calculated F is greater than F in the table (p<0.05); it is then concluded that
this model is significant at the 95 percent level. In other words, this model is valid and the findings show that R2
of the model is 19% which states that 19 percent of the changes in the dependent variable are explained by
independent and control variables.

Analyzing the third hypothesis:
The third hypothesis examines the impact of implementing accounting standards 30 and 31 on P/E ratio. This
hypothesis has the following statistical form:
H 0 : bs  ˆ s
H : b  ˆ
1
s
s
According to table 6, the calculated F statistic is 2.49 and its significance level is 0.000 and shows that the
null hypothesis should be rejected and the panel data should be employed. On the other hand, the result of
Breusch-Pagan confirms the random effects and shows that the panel data approach based on random effects
should be used to estimate the equation.
Table 6: Results of the used tests to determine the method for the third hypothesis.
Index
Statistics
Sig. level
Test
F Limer
2.94
0.00
Breusch-Pagan
77.78
0.00
Hausman
3.91
0.2717
Result
Panel data
Random effects
Random effects
The results of testing the hypothesis by using Stata software is represented in table 6.
Table 7: Model of random effects for testing the third hypothesis.
Pi ,t
Ei ,t
 0  1STANDARDt   2 SIZEi ,t  3 AGE _ LISTi ,t   t
Sig. level
Z statistics
Std. deviation
Coefficient
0.00
0.168
0.017
0.773
5.87
-1.38
-2.4
0.29
0.124783
0.0070439
0.0007417
0.0971093
0.732177
-0.0097157
-0.0017767
0.0279933
F
Index
Variable
Standard
SIZE
AGE-LIST
Intercept
2
:)( 11.12( )0.000( R 0.06 :)
Based on table 7, it can be concluded that the implementation of accounting standards 30 and 31 has positive
significant impact on P/E ratio. The results of data analysis showed that there is a positive relationship between
these two variables. The coefficient of this variable is 0.07 which is significant at the 95 percent level. It is found
that AGE-LIST is negatively associated with P/E ratio at the 95 percent level. Generally, F statistic measures the
validity of the model. According to table 7, the calculated F is greater than F of the table (p<0.05); then it is
concluded that this model is significant at the 95 percent. In other words, this model is valid enough. The findings
also reveal that R2 of the model is 6% and it means that 6% of the dependent variables is explained by
independent and control variables.

Analyzing the fourth hypothesis:
The fourth hypothesis examines the impact of implementing standards 30 and 31 on EPS. This relationship is
as follows:
H 0 : bs  ˆ s
H : b  ˆ
1
s
s
Based on table 8, the calculated F is equal to 3.03 and the significance level is 0.000 (p<0.05); in other
words, the calculated F Limer shows that the null hypothesis should be rejected and the panel data approach is
confirmed. The Hausman test also confirms the efficiency of fixed-effect approach. Generally, the fixed-effect
panel data is used to estimate the equation.
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Table 8: Results of the tests used to determine the method for the fourth hypothesis.
Index
Statistics
Sig. level
Test
F Limer
3.03
0.00
Breusch-Pagan
67.77
0.00
Hausman
3.91
0.00
Result
Panel data
Random effects
Fixed- effect
Table 9 represents the results of testing the unequality of variance for the fourth hypothesis. The value of

2
shows that the null hypothesis of equality of the variance is rejected and the variances are unequal in the
model.
Table 9: Results of testing the equality of variance for the fourth hypothesis.
Index
Statistics
Test
Likelihood ratio
12281.66
Sig. level
Result
0.00
Unequality of variance
Consequently, GLS method is used to estimate the equation related to the fourth hypothesis. The results of
the model estimation are shown in table 10.
Table10: GLS method for the fourth hypothesis.
EPSi ,t   0  1STANDARDt   2 SIZEi ,t   3 AGE _ LISTi ,t   t
Sig. level
Z statistics
Std. deviation
Coefficient
0.001
0.00
0.00
0.003
-3.43
6.54
7.87
-2.92
18.28774
5.854457
0.5583409
79.60638
-62.65918
38.26955
4.395946
-232.6351
F
: 18.1(0.00)
Index
Variable
Standard
SIZE
AGE-LIST
Intercept
R 2 :(0.08)
The results in table 10 show that the implementation of accounting standards 30 and 31 has significant
negative impact on EPS. The findings of data analysis indicate that there is a negative association between these
two variables and this coefficient is -62.65; the significance level is 0.00 which is significant at the 95 percent
level. In terms of the control variables, SIZE and AGE-LIST are found to be significant. Based on the findings in
table 10, the calculated F is greater than F of the table (p<0.05) and it is concluded that this model is significant at
the 95 percent level. In other words, this model is found to be valid. In addition, R2 of the model is 0.08 and it
represents that 8 percent of the changes in the dependent variable is explained by the independent and control
variables.
5. Discussion, Conclusion and Suggestion:
The economic prosperity requires some regulations which make the business environment transparent and
attractive and have interactions with the global economy and regulate the economic relationships in this field.
Accounting standards are among these regulations. Through the financial statements, the standards provide the
required information about the financial position, operation results and corporate behavior. According to the
accounting standards, the objective of preparing financial statements and disclosing the financial information is
providing useful information about the financial position and operating results for making better decisions. The
information might be achieved through different sources. The transparent financial statements are reliable,
comprehensive, related and timely. In other words, the transparent financial statements have information content.
The shareholders mostly rely on the information related to earnings. Francis et al [12](2005) argue that the net
income is one the key elements of the financial reports. The net income reported in the financial statements is a
significant measure of performance evaluation and it determines the value of the entity and has been widely used
by accounting practitioners, financial directors, analysts of the stock market, investors and shareholders. This
study seeks to find whether the implementation of accounting standards 30 and 31 impact the financial
performance. The financial ratios are one of the common instruments to interpret the information on the financial
statements. The changes in the items of the financial statements might be clearly observed. To measure the
financial performance in this study, ROA, P/E ratio, ROE and EPS are used to analyze the required data. The
present study covers a period from 2006 to 2011 (a six-year period) and 122 firms are selected as the sample. The
results of testing the hypotheses reveal that implementing standards 30 and 31 has significant impacts on P/E,
ROA and EPS; however, no significant impact was found for ROE.
The standards aim at consistency and comparability of the financial information which will result in
enhancing the quality of the financial information. Setting accounting standards will also cause mitigating the
information asymmetry in the stock exchange. The standard setters are suggested to complete the project of the
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Advances in Environmental Biology, 8(21) October 2014, Pages: 14-23
national standards and localize the standards to mitigate the information asymmetry and motivate the investors to
invest their funds in the stock exchange. This will consequently benefit the investors and promote the capital
market. However, the committee of standard setting should consider the costs of reinforcing the standards. The
principle of cost-benefit should be considered in implementing the standards. Based on the findings of this study,
the implementation of standards 30 and 31 impacts some of the financial ratios and it seems that the costs of
implementing these standards excess the benefits and their implementation will enhance the quality of the
financial information. To the best of our knowledge, this is the first study seeking this impact in Iran; however,
the following suggestions are made for the future studies:
1. The other elements of the financial performance might be used in future studies about the accounting standards.
2. The impact of implementing accounting standards on the relevancy of the information might be further
examined in future studies.
3. The future studies might examine the impact of implementing standards 30 and 31 on the financial
performance of different industries.
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